- Trade- or retail price?
- Which value is most relevant?
- What about classics or collectable cars?
- Research online
From the moment its wheels first touch the roadway, your car's value starts decreasing. This sad reality is due to the fact that, with the exception of classic- or collectable cars, all vehicles are depreciating assets. And, while there isn't anything you can do to avoid this depreciation, it's helpful to know how much your car is worth when the time comes to trade it in, or when you need to update your insurance policy. Here's how you can determine a realistic value for your car.
Trade- or retail price?
Your car has two different values, depending on the side from which you’re looking. Firstly, there’s the “Trade” value, which is an indication of how much a dealer would be likely to offer you if you were to trade in the vehicle for another one. The flip side of this coin is known as the “Retail” value, which is an indication of how much a dealer would ask for your car if it were to find its way onto their showroom floor.
There’s quite a substantial difference between trade- and retail values, with trade being significantly lower than the retail value (as much as 20% lower, in most cases). This is mainly due to the fact that there’s a mark-up for dealers built into the retail value – buying cheap and selling dear, as it were. Of course, these values are somewhat arbitrary and can be influenced by the popularity of your specific car in the second-hand trade, as well as a car’s reputation among pre-owned dealers.
These values are also determined by the condition of the car, its age, and its mileage – the general rule is that lower mileage will result in a higher value (and vice versa), while younger cars (in terms of years) will be worth more than otherwise-identical but older examples. Dealerships and private buyers also utilise vehicle history checks to confirm the vehicle’s condition and age.
Which value is most relevant?
That depends on what you intend to do with this information. For insurance purposes, it’s best to have your car valued as close to the retail value as possible, because that’s how much it will cost you to replace it in the event of irreparable accident damage or theft. However, if you’re considering selling or trading in the car, the trade value takes on greater significance, as that’s how much a dealer is likely to offer you.
Selling your car privately (in other words, not to a dealer) presents a slightly different scenario, as you’re likely to get more for your car in a private sale than if you were to trade it in. In this case, your car’s value will be somewhere between the trade- and retail values – higher than the former, but lower than the latter. After all, you’d like some return for going to the effort of selling it yourself, while the buyer will expect at least some discount by not working through a dealership.
What about classics or collectable cars?
This is a rather difficult question, as most classic cars (or even just really old ones) will not have any regular retail- or trade value anymore. These cars are generally valued according to their rarity and condition rather than merely the model, mileage and age.
For these cars, it’s best to contact an owner’s club for the particular brand, because they will have a better idea of values based on recent sales and demand for specific cars. Classic cars also go through value variations as time goes by. As an example, air-cooled Porsche 911s experienced a major slump in value about two decades ago, but that has since picked up to the extent that even a dog-eared 964 Carrera 4 Tiptronic convertible (arguably the least-desirable early 911) is worth 10 times as much now as it was 20 years ago.
Research online
Not only will you be able to browse classified listings for cars like yours online to determine how much they would sell for on the open market, but there are also handy tools available like the ones in the related link above. Other resources include the well-known Mead & McGrouther reference book used by many dealerships, although you’d probably have to visit a dealer to get access to that information.
While there are no set rules to determine the value of your car, these resources could help you get a fair idea of how much it’s worth. It might not be as much as you’d hoped for, but at least you will know.
Keyword: How to know how much your car is worth?